Business Outlook: A bleak picture at Kodak

Friday 7 November 1997 00:02 BST

Click to followThe Independent Online

Next Tuesday the chief executive of Kodak, George Fisher, will present Wall Street with a snapshot of where the company is and a time-delayed frame of where he plans to take it. For the group's 94,000 workers, the picture looks bleak. The word is that he will take the axe to the business so violently that when he is finished, Kodak will have become, if not a virtual corporation, then certainly a pale image of its former self.

As many as 14,000 job cuts are being spoken of along with a savage streamlining of production operations, the relocation of manufacturing facilities to low-cost countries and an exit from the business of making photographic paper, one of the main planks on which the Kodak brand has been built. This is as massive a corporate restructuring as they come.

It is clear something needs to be done. The company being overtaken and flattened by the Japanese, notwithstanding the company's famous brand name. Its share price has fallen by a third this year alone, its costs are 25 per cent higher than rivals such as Fuji, and its investment in the technology of tomorrow, the digital camera, has so far proved an expensive failure.

But for all that Kodak's solution sits oddly with the mood in the rest of corporate America, where there has been a fierce backlash against slash and burn labour policies and the ferocious downsizing that became the hallmark of the early 1990s. Job reduction and compression aside, the main thrust of the company's revival strategy looks like being big price cuts in its core retail film business, which might allow it to match the competition from Japan but threatens to leave a $500m hole in operating profits. It is not obvious that such tactics will succeed in reviving the company.